Risk Management Article

Risk Management

Risk Management

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Gleb Tsipursky
Quality professionals are often told that “failing to plan is planning to fail.” You might be surprised to learn that this phrase is a misleading myth at best and actively dangerous at worst. Making...
    To date, this series focused on relatively simple data analyses, such as learning one summary statistic about our data at a time. In reality, we’re often interested in a slightly more sophisticated analysis, so we can learn multiple trends and takeaways at once and paint a richer picture of our...
    Iwas talking to a friend recently, and the subject of organizational health came up. With my quality background my ears perked up, and I asked him to explain what he thought organizational health meant. The friend went on for several minutes explaining that organizational health was all about six...
    This series is about planning for the worst that can face us. It’s jumping-off point is the National Institute of Standards and Technology publication, “A Case Study of the Camp Fire—Fire Progression Timeline,” an epic and thorough study about the wildfire that changed the lives of my family,...
    I was talking recently with a friend who runs an academic program at a major U.S. university. She was telling me about solving a problem in her department and how the solution was obvious so she just did it. She then related how one of her colleagues protested that she should have used some Six...

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Randall Goodden’s picture

By: Randall Goodden

E

very year in the United States, an estimated 80,000 product liability lawsuits are filed, and thousands of products recalled—and that’s happening to companies with certified quality programs in place.

In 2014 alone, some of the highest fines were imposed by government agencies because corporations mishandled product safety issues. Juries have handed out the largest awards to plaintiffs in more than a decade.

And yet, according to “Navigating the Product Mindset,” a recent study published by UL, 97 percent of manufacturing executives surveyed thought their companies and management teams were “ahead of the curve in delivering safe and reliable products,” even though all the data show just the opposite.

Multiple Authors
By: Marc Dominus, Douglas Montgomery

The key challenge for risk professionals is no longer how to establish an enterprise risk management (ERM) program, but how to sustain its effectiveness. Often, ERM programs get off to a great start but soon lose their momentum because of certain missteps that occur.

Misstep 1: Assuming that the relevance of ERM is obvious

As risk professionals, we think that everyone understands the importance of ERM, but that isn’t always the case. Many employees ask, “Why should I invest my time in this? What’s in it for me?” Or, “I don’t need a structured ERM program because we already manage our risks well.”

Chad Kymal’s picture

By: Chad Kymal

The final draft international standard (FDIS) of ISO 9001:2015 will be released in July, and the revised standard is slated for publication in September. Per Annex SL of the “Consolidated ISO Supplement,” some elements of the standard will be restructured to allow for easier integration of multiple management systems.

This restructuring follows a high level structure (HLS) required for all ISO management system standards and will result in the same subclause names, common texts, and terms and definitions for all the ISO management system standards. This is one of the major changes that will act as a catalyst for integration between standards or what we call “integrated management systems.” Generally speaking, integrated management systems refers to integrated processes that result in one management system to implement ISO 9001, ISO 14001, OHSAS 18001 (the new ISO number will be ISO 45001) or food safety standards such as FSSC 22000.

Benjamin Mack’s picture

By: Benjamin Mack

Suppliers play a major role in bringing products to market. This means that the product received from suppliers must be safe and of the highest possible quality, which is a must because stakeholders not only rely on their suppliers to help bring products to market—they also rely on them to help maintain their brand image.

Including suppliers in your business processes allows them to access your compliance standards and provides you with greater visibility into their processes, making collaboration between supplier and stakeholder faster and less prone to error.

Furthermore, when we look at businesses today, regardless of industry or size, we see the growing trend of tearing down informational silos. This is a good thing, because the less division stakeholders have in their data yields greater visibility into all aspects of the business. For processes around quality and compliance management, this means that there’s more information to pull from when trying to mitigate risk and improve compliance. For the supply chain, however, it’s an evolving process.

Multiple Authors
By: Paula Oddy, Jeffrey Eves

In the years since ISO 9001 and ISO 14001 were first published, many organizations have followed the models of these standards in designing their own management systems. However, many of those systems haven’t been utilized to effectively manage risk. Many have been minimally developed to meet customer requirements or legal regulations.

The draft revisions to ISO 9001 and ISO 14001 will provide a way for companies to look at their processes in a new light and to take a more active approach to risk management. For example, if a company wishes to pursue ISO 14001 certification, its prevention of pollution policy will have to be revamped to focus on protection of the environment. As the company moves in that direction it will truly become more competitive on a global basis.

Although we’ve seen this trend coming, the upcoming revisions to ISO 9001 and ISO 14001 are proof that quality management and risk management can no longer be considered separate issues for your organization. The revisions call for greater flexibility and recognize the need for businesses to integrate their quality or environmental management processes into the overall business strategy.

James Lamprecht’s picture

By: James Lamprecht

Anyone who has done an online search using the terms “risk analysis,” “managing risk,” “risk management,” or any other variation will have discovered that the subject has been around for a long time and been covered by numerous authors. Still, the daunting challenge remains: How can one conduct process risk analysis without the help of a Ph.D. in statistics? 

FMEA fundamentals

A popular technique often invoked by various experts is failure mode and effects analysis (FMEA), developed several decades ago. This simple and controversial technique relies on the assignment of subjective ordinal numbers (usually using a 1–10 Likert-type scale) to estimate probabilities for three events:
• The difficulty (D) of detecting a failure
• The severity (S) of the failure
• The likelihood of occurrence (O) of the failure

These three subjectively estimated ordinal numbers are multiplied to “compute” risk priority numbers (RPNs) for various process steps. The RPNs are then ranked from highest to lowest, and the process steps with the highest RPNs are then analyzed to see how process improvements can be designed to help reduce the RPN—ideally to zero.

Quality Digest’s picture

By: Quality Digest


Some of the [ISO 9001: 2015] requirements are relatively clear; others are more “euphemisms,” and you don’t know how to react…
—James Lamprecht, author of ISO 9000: Preparing for Certification (CRC Press, 1992) and former member of ISO/TC 176

During an Aug, 16, 2013, interview on Quality Digest’s weekly webcast Quality Digest Live! James Lamprecht, currently a management consultant, provided insight into the latest revision of the ISO 9001 standard.

Tim Lozier’s picture

By: Tim Lozier

Editor’s note: Tim Lozier will be a guest on Quality Digest Live this Friday, Oct. 18, 2013, at 11 a.m. Pacific

During the past few years, risk management continues to be a topic of interest. There are plenty of benchmarking trends that point to risk. We see it in enterprise strategic initiatives. We see it being incorporated into standards and regulations. And yet, I think that for many, the concept of risk remains an enigmatic and elusive concept.

In many companies leaders are so concerned with day-to-day operational issues, that conducting risk assessment and management, although strategically significant, is perceived to be something that will be done way off in the future. This is far from the reality—in fact many companies are already addressing risk in one way or another, but don’t know it.

Ed Perkins’s picture

By: Ed Perkins

Much has been written and discussed about “risk” being the future of “quality.” But what does this really mean, and how does it work?

Definitions of quality

Let’s us look at common working definitions of quality: zero defects, customer satisfaction, control of process variance, reliability, security, and fit for purpose. These are all objectives a quality program is aimed at satisfying. ISO 9000:2005—“Fundamentals and vocabulary for quality management systems” defines quality as the “degree to which a set of inherent characteristics fulfills requirements.”

BusinessDictionary.com states this definition of quality: “In manufacturing, a measure of excellence or a state of being free from defects, deficiencies, and significant variations, brought about by the strict and consistent adherence to measurable and verifiable standards to achieve uniformity of output that satisfies specific customer or user requirements.”

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